I have participated in the Personal Finance blogging community for awhile now and I have begun to notice something that seems so obvious but hasn’t really been put into words in the way the I’m about to put it: the bigger your debt repayments, the higher the likelihood that you will succeed in your debt repayment goals. Or, if you’re not paying $500, $700, $1,000 each month in debt repayment-you’re going to lose momentum FAST.
How Do I Give This Idea Credibility?
Check Out the Following Bloggers:
Catherine from Plunged in Debt: that month she paid around $1500 and that was LOWER than usual
Melanie from Dear Debt: She put $1300 towards her debt that month
Michelle from Making Sense of Cents: She.Works.HARD! And this work ethic helped her crush her student loans.
Jordann from My Alternative Life: Please note what she says in October about putting an additional $1000 towards the debt.
Toni from the Debt Free Divas paid off over $100,000 and larger payments were key in achieving that goal!! *added this after post went live 🙂
Your Debt Repayment Minimum
The bigger the debt repayment that you’re making the more focused you are about the following debt repayment activities:
- Finding side hustles-the more you focus on them, the more you’ll find. They begin to multiply like rabbits.
- Focus-you’re too busy to lose focus on your goal. Haven’t you noticed that the busier you are the more focused you tend to get?
- You get addicted–To the process! As you gain momentum and success you will get addicted to seeing the debt numbers drop-quickly.
You get the picture. It’s my opinion that smaller payments don’t move the needle fast enough-even if they are double the minimum for the bill that you’re paying on. The larger the payments the easier it is to gain and sustain momentum in your repayment process.
Last year I paid off 2 credit cards. I have 2 more cards to go and my student loans. My current goal is to take care of the credit cards this year and then focus on the student loans. I have to admit though that I had a substantial decrease in momentum this year.
Part of that was a shift in focusing on some issues that I want to deal with in terms of how I’m living my life. I also spent a lot of money fixing things in my home. I have to admit that it has been very surprising how much energy it has taken to focus on those things and while I’m very proud of people who can focus on everything at once, I just didn’t have the energy to do that earlier this year.
Some of you may be wondering how on earth you will find the extra money to hit such a large repayment goal?
You would be surprised. Here are some ideas
- Cut your monthly expenses-You may have cut your expenses already. Look at more line items in your budget and cut them further. I saved over $1100 this year by changing my cell phone service. I also saved almost $2000 this year by taking items out of a storage unit. Three thousand dollars is a huge savings in one year.
- Track your discretionary monthly expenses–I’ve tracked my monthly expenses for July and found a lot of wasted money. French Farmer’s Market anyone??
- Is Everyone on Board–If you live in a multi-person home make sure that you are all on the same page and in agreement about your goals. Make sure to include family/whomever in all discussions concerning your finances and short-term/long-term goals.
- Micro-resolutions-I’m addicted to these!! I will be writing a post about them next week. Micro-resolutions are basically small, very clear changes that create lasting big successes. For example: I wanted to get to work much earlier than my usual time. I wasn’t having a lot of success with that goal. I was trying to: wake up early, exercise, and do other other things. I was basically overwhelmed and started going back to sleep. Snooze is fabulous. Now, I my goal was simple: wake up and turn on light. That’s it. No exercising, nothing else. Just get up and out of bed so that I could leave early. Since I made this switch, I’ve been early to work.
- Side Hustle–Develop the ability to find and opportunities that will earn you extra money. I focus on short turn around projects that pay high hourly rates. The higher the hourly earning and shorter-time frame=more time to make more money.
- Rent out a room in your home-Thoroughly vet a potential roommate. Remember, it’s a business transaction that happens in your home. If you get a bad vibe-trust it. Get deposits, and a very clear lease agreement
- Work Your Food Budget–Huge. If you don’t have your food budget under control you are bleeding money….and probably gaining weight (like I did)
The point is, rock your repayment. Dig deep and rethink your process. Maybe you can’t pay $1000 extra the first month you decide to increase your payments. But, $500 is pretty good.
Go Big Or Go Home. Good luck! I’m in your corner 🙂
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Thanks for the mention lady. I’m actually striving to put a minimum of $2100/month towards debt amd ideall id like $2500 some months will be better than others so just have to deal with ebb and flow 🙂
Freaking amazing. And that’s why the needle is moving in the right direction!! I had to admit to myself that even though my extra payments were good in general, my Rock Star months were always the ones that truly moved the needle mentally and literally.
Thanks for the mention 🙂 in a good month I’m attempting to put $2,500 towards debt..yup, non mortgage debt. At least a very minimum of $2000. Sickening really but totally necessary!
Hehe 🙂
Toward the end, I was paying $1K towards the debt snowball with no pain at all. I hear you loud and clear.
Toni, I’m going to add you to my list! There is just a point where the needle just needs to move faster in order to make things happen. The larger debt repayments are key to that and I’ve learned that the hard way.
Love this post! Yes, higher debt payments are definitely worthwhile. With payments at $500 and above, you can really see your progress and I believe that leads to more motivation.
I just noticed a huge difference in my approach to debt repayment depending on the amount I was repaying. I’m in a huge reboot process right not because my momentum dropped. I’m looking forward to moving things along faster!!
If I didn’t have payments of 1k+ it would feel pointless. I STILL have almost $300 being eaten up in interest per month, so if I want it to actually move it has to be BIG. It’s tough and I hate how much I put to debt, but it’s necessary if I actually want to be debt free and not effectively double the size of my loan. Thanks for the mention, girl! 🙂
Doh! I had completely forgotten about the interest! Thanks so much for bringing up the most important part of paying more. The interest vs. principle ratio shifts so that the loan/debt stops growing so fast. I can’t wait to read your debt free post 🙂
I like the idea of micro goals too. Sometimes it just takes that inertia to get the ball rolling. Often times people give up goals because they are too far out of reach and so they give up. I’m also like you in that I can’t focus on a million things at one time. I’m trying to simplify my life, not make it more complicated. 🙂
I’m writing about micro-resolutions next week. I can’t tell you what a HUGE difference they have made in some of my goal planning. I didn’t realize how complicated I was making my goals. They felt easy-but they really weren’t the closer I looked at them. Like you, I’m trying to keep things simple.
I’m not in debt but I kinda feel similarly about saving. Especially now I’m earning more, saving little dribs and drabs almost don’t feel worth it…
I totally agree about saving in large focused amounts. Once I shift to aggressively saving I plan on depositing the largest amounts that I possibly can every time.
Huge payments make the biggest difference. I miss the days when I was throwing over $500 each month towards my loans. Can’t wait to get back to that level!
Summer is soooo distracting. I think a lot of us lost a little momentum in the past couple of months. It’s almost Fall and almost time to hunker down again and get it done.
I agree that larger payments really help to get debt paid down or to ramp up savings. When I applied laser focus to my debt, I was paying $2k per month if not more. I had initially projected it would take five years to pay off my debt. Instead, it took me 35 months. I did whatever I could to increase my debt snowballs. Good post Michelle!
Wow!! Kassandra, you killed the debt snowball! I’m really in that headspace. I’m so over debt and i’m looking forward to getting super intense and focused as I repay it. I’ve allowed my debt to be a road block to a number of things in my life and I’m no longer willing to do that.
I agree that making bigger payments is great for momentum – seeing those results happen quickly is what is needed. I like your suggestion of micro resolutions. Breaking tasks down to very small goals can start the ball rolling with what you need to do!
As I re-start my debt repayment process and look back on the past year-the bigger the debt repayment the more I seemed to believe in the process of repaying the debt and I actually get it done. The smaller repayments are easier to not feel as deep a commitment to-you know what I mean?
Totally agree! I’m putting between $1,000 – $1,300 per month, plus any windfalls. Honestly, I would be so unmotivated if it was less. We are all pushing for debt-free and anything to make that journey as “easy” (aka quick) as possible so you need the big chunks.
I just noticed that the bigger the payments, the more invested I was in the process. Then, as I read other people’s debt repayment posts, it seemed to be a similar sentiment. The smaller payments are just motivation drainers. They just take too long to lower the debt.
I totally agree — I LOVED making huge payments to my loans (over $2k a month for the last few months I was working on them.) I could see visible progress when I was doing that. Steadily chipping away at my credit card debt at the rate of a few hundred a month is just not as much fun, at all.
I find that I’m so much more invested in the bigger prepayments. There is almost an addictive feeling, as I wonder how much I can make doing fun side hustles. I love the challenge of the process.